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Merging Water And Waste-Water Industries Will Bring Economies Of Scale
26/03/2007 Bernama

SHAH ALAM, March 26 (Bernama) -- The possible merger between the water and sewerage industries as envisaged under the Water Services Industry Act 2006 (WSIA) may bring potential benefits to the country because it allows management by a single entity and economies of scale in terms of operation, said General Manager of Indah Water Konsortium (IWK) Ir Muhammad Haniffa Abdul Hamid.

At present, IWK provided sewerage service to 86 of the 144 local authorities in Malaysia, which was still not in a holistic manner, while the sewerage in other local authorities were still managed on a ad-hoc basis, he said in his paper "Sewerage Development in Malaysia - Past , Present & The Future," at the Conference on Managing Challenges Towards Sustainable Water Resources & Environment, here Monday.

The two-day conference which began Monday was organised by the Malaysian Institute of Strategic and International Studies (ISIS) and the Water Association of Selangor, Kuala Lumpur and Putrajaya.

The merger between water and sewerage industries might see the drawing up of integrated operating plans to ensure the quality of water resources for treatment and consumption meet certain standards as well as the quality of effluent released back to the water resource, he said.

Besides, the current problem especially that of collecting sewerage service might be reduced as full cost recovery might be achieved through integrated billing of water and waste-water to consumers.

Haniffa said currently, the tariff structure of IWK was inadequate to recover operation and maintenance cost of the company and the capital expenditure was currently borne by the government.

For example the average tariff of IWK was between RM24 to RM96 per year, whereas Singapore charged S$144.00 ( RM331) and Bangkok charged Baht 1,260 (RM115) a year for sewerage services.

He added WSIA also offered possible resolution to certain critical issues for the sewerage industry such as billings and collection, refusal for individual septic tank dislodging service and maintenance of private sewage treatment plans.

On the future structure of the industry, he said there might be three different form of entities in this sector -- the water-plus sewerage company, water-only company and sewerage-only company .

However, he said water and sewerage company might immediately enjoy the benefit of sewerage collection through water bills and possible cost rationalisation, whereas sewerage only company could suffer from loss of cross subsidies.

The water and sewerage company would have a matching customer database between water and waste-water services enabling them to have potential economies of scope and sharing billing costs between water and waste-water.

-- BERNAMA

 

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